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Sykes Enterprises, Incorporated Reports Fourth-Quarter And Full-Year 2012 Financial Results

About Sykes Enterprises, Incorporated

SYKES is a global leader in providing a comprehensive customer contact management solutions and services in the business process outsourcing (BPO) arena. SYKES provides an array of sophisticated customer contact management solutions to Fortune 1000 companies around the world, primarily in the communications, financial services, healthcare, technology and transportation and leisure industries. SYKES specializes in providing flexible, high quality customer support outsourcing solutions with an emphasis on inbound technical support and customer service. Headquartered in Tampa, Florida, with customer contact management centers throughout the world, SYKES provides its services through multiple communication channels encompassing phone, e-mail, web, chat and social media. Utilizing its integrated onshore/offshore and virtual at-home agent delivery models, SYKES serves its clients through two geographic operating segments: the Americas (United States, Canada, Latin America, India and the Asia Pacific region) and EMEA (Europe, Middle East and Africa). SYKES also provides various enterprise support services in the Americas and fulfillment services in EMEA, which include multi-lingual sales order processing, payment processing, inventory control, product delivery and product returns handling. For additional information please visit www.sykes.com .

Forward-Looking Statements

This press release may contain "forward-looking statements," including SYKES' estimates of future business outlook, prospects or financial results, statements regarding SYKES' objectives, expectations, intentions, beliefs or strategies, or statements containing words such as "believe," "estimate," "project," "expect," "intend," "may," "anticipate," "plans," "seeks," "implies," or similar expressions. It is important to note that SYKES' actual results could differ materially from those in such forward-looking statements, and undue reliance should not be placed on such statements. Among the important factors that could cause such actual results to differ materially are (i) the impact of economic recessions in the U.S. and other parts of the world, (ii) fluctuations in global business conditions and the global economy, ability of maintaining margins offshore (iii) SYKES' ability to continue the growth of its support service revenues through additional technical and customer contact centers, (iv) currency fluctuations, (v) the timing of significant orders for SYKES' products and services, (vi) loss or addition of significant clients, (vii) the early termination of contracts by clients, (viii) SYKES' ability to recognize deferred revenue through delivery of products or satisfactory performance of services, (ix) construction delays of new or expansion of existing customer support centers, (x) difficulties or delays in implementing SYKES' bundled service offerings, (xi) failure to achieve sales, marketing and other objectives, (xii) variations in the terms and the elements of services offered under SYKES' standardized contract including those for future bundled service offerings, (xiii) changes in applicable accounting principles or interpretations of such principles, (xiv) delays in the Company's ability to develop new products and services and market acceptance of new products and services, (xv) rapid technological change, (xvi) political and country-specific risks inherent in conducting business abroad, (xvii) SYKES' ability to attract and retain key management personnel, (xviii) SYKES' ability to further penetrate into vertically integrated markets, (xix) SYKES' ability to expand its global presence through strategic alliances and selective acquisitions, (xx) SYKES' ability to continue to establish a competitive advantage through sophisticated technological capabilities, (xxi) the ultimate outcome of any lawsuits or penalties (regulatory or otherwise), (xxii) SYKES' dependence on trends toward outsourcing, (xxiii) risk of interruption of technical and customer contact management center operations due to such factors as fire, earthquakes, inclement weather and other disasters, power failures, telecommunications failures, unauthorized intrusions, computer viruses and other emergencies, (xxiv) the existence of substantial competition, (xxv) the ability to obtain and maintain grants and other incentives, including tax holidays or otherwise, (xxvi) risks related to the integration of the businesses of SYKES and Alpine Access and (xxvii) other risk factors listed from time to time in SYKES' registration statements and reports as filed with the Securities and Exchange Commission. All forward-looking statements included in this press release are made as of the date hereof, and SYKES undertakes no obligation to update any such forward-looking statements, whether as a result of new information, future events, or otherwise.

       
Sykes Enterprises, Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Exhibit 1
       
       
       
  Three Months Ended
  December 31, December 31, September 30,
  2012 2011 2012
       
Revenues  $ 304,272  $ 276,234  $ 280,526
Direct salaries and related costs (201,194) (181,978) (183,628)
General and administrative (86,974) (82,086) (87,905)
Net gain (loss) on disposal of property and equipment  (308)  (411) (199)
Net (gain) on insurance settlement  --  --  --
Impairment of long-lived assets  (84)  (954)  (122)
Income from continuing operations 15,712 10,805 8,672
Total other income (expense), net (784) 273 (839)
Income from continuing operations before income taxes 14,928 11,078 7,833
Income taxes (1,638) (5,118) 309
Income from continuing operations, net of taxes 13,290 5,960 8,142
(Loss) from discontinued operations, net of taxes  --  (1,441)  --
Gain (loss) on sale of discontinued operations, net of taxes  --  559  --
Net income (loss)  $ 13,290  $ 5,078  $ 8,142
       
       
Net income (loss) per share:      
Basic:      
Continuing operations  $ 0.31  $ 0.14  $ 0.19
Discontinued operations 0.00 (0.02) 0.00
Net income (loss) per share  $ 0.31  $ 0.12  $ 0.19
       
Diluted:      
Continuing operations  $ 0.31  $ 0.14  $ 0.19
Discontinued operations 0.00 (0.02) 0.00
Net income (loss) per share  $ 0.31  $ 0.12  $ 0.19
       
Weighted average shares:      
Basic  43,057  43,659  43,014
Diluted  43,081  43,847  43,031
     
Sykes Enterprises, Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Exhibit 2
     
     
  Year Ended
  December 31, December 31,
  2012 2011
     
Revenues  $ 1,127,698  $ 1,169,267
Direct salaries and related costs (737,952) (763,930)
General and administrative (341,354) (341,586)
Net gain (loss) on disposal of property and equipment (391)  3,021
Net (gain) on insurance settlement 133  481
Impairment of long-lived assets  (355)  (1,718)
Income from continuing operations 47,779 65,535
Total other income (expense), net (2,622) (1,879)
Income from continuing operations before income taxes 45,157 63,656
Income taxes (5,207) (11,342)
Income from continuing operations, net of taxes  39,950 52,314
(Loss) from discontinued operations, net of taxes  (820) (4,532)
Gain (loss) on sale of discontinued operations, net of taxes  (10,707)  559
Net income (loss)  $ 28,423  $ 48,341
     
     
Net income (loss) per share:    
Basic:    
Continuing operations  $ 0.93  $ 1.15
Discontinued operations (0.27) (0.09)
Net income (loss) per share  $ 0.66  $ 1.06
     
Diluted:    
Continuing operations  $ 0.93  $ 1.15
Discontinued operations (0.27) (0.09)
Net income (loss) per share  $ 0.66  $ 1.06
     
Weighted average shares:    
Basic  43,105  45,506
Diluted  43,148  45,607
     
Sykes Enterprises, Incorporated
Segment Results
(in thousands, except per share data)
(Unaudited)
Exhibit 3
     
     
  Three Months Ended
  December 31, December 31,
  2012 2011
     
Revenues:    
Americas  $ 258,306  $ 227,583
EMEA 45,966 48,651
Total  $ 304,272  $ 276,234
     
Operating Income:    
Americas  $ 24,192  $ 26,374
EMEA 3,627 (4,917)
Corporate G&A expenses (12,107) (10,652)
Income from continuing operations 15,712 10,805
     
Total other income (expense), net (784) 273
Income taxes (1,638) (5,118)
     
Income from continuing operations, net of taxes  $ 13,290  $ 5,960
     
     
     
  Year Ended
  December 31, December 31,
  2012 2011
     
Revenues:    
Americas  $ 947,147  $ 963,142
EMEA 180,551 206,125
Total  $ 1,127,698  $ 1,169,267
     
Operating Income:    
Americas  $ 93,580  $ 115,727
EMEA 5,488 (3,746)
Corporate G&A expenses (51,289) (46,446)
Income from continuing operations 47,779 65,535
     
Total other income (expense), net (2,622) (1,879)
Income taxes (5,207) (11,342)
     
Income from continuing operations, net of taxes  $ 39,950  $ 52,314
     
Sykes Enterprises, Incorporated
Condensed Consolidated Balance Sheets
(in thousands, except seat data)
(Unaudited)
Exhibit 4
     
     
     
  December 31, December 31,
  2012 2011
     
Assets:    
Current assets  $ 467,342  $ 482,074
Property and equipment, net 101,295 91,080
Goodwill & intangibles, net 296,268 165,814
Other noncurrent assets 43,784 30,162
Total assets  $ 908,689  $ 769,130
     
Liabilities & Shareholders' Equity:    
Current liabilities  $ 164,583  $ 149,285
Noncurrent liabilities 137,842 46,279
Shareholders' equity 606,264 573,566
Total liabilities and shareholders' equity  $ 908,689  $ 769,130
     
     
     
Sykes Enterprises, Incorporated
Supplementary Data
     
     
     
  Q4 2012 Q4 2011
     
Geographic Mix (% of Total Revenues):    
Americas (1) 85% 82%
Europe, Middle East & Africa (EMEA) 15% 18%
Total 100% 100%
     
(1) Includes the United States, Canada, Latin America, South Asia and the Asia Pacific (APAC) Region. Latin America, South Asia and APAC are included in the Americas due to the nature of the business and client profile, which is primarily made up of U.S. based clients.
     
     
  Q4 2012 Q4 2011
     
Vertical Industry Mix (% of Total Revenues):  
Communications 32% 31%
Financial Services 28% 30%
Technology / Consumer 17% 19%
Transportation & Leisure 8% 8%
Healthcare 7% 7%
Other 8% 5%
Total 100% 100%
     
     
  Seat Capacity (3)
  Q4 2012 Q4 2011
     
Americas (2) 34,000 35,500
EMEA 5,300 5,800
Total 39,300 41,300
     
Offshore 22,000 22,300
     
     
  Capacity Utilization
  Q4 2012 Q4 2011
     
Americas (2) 74% 74%
EMEA 82% 71%
Total 75% 73%
     
Offshore 77% 78%
     
(2) Americas data includes offshore as some clients in the U.S. are serviced from offshore geographies, including The Philippines, Costa Rica, etc.
     
(3) The seat capacity and capacity utilization data are related to the Company's brick-and-mortar call centers. At the end of fourth quarter 2012, the Company had approximately 3,300 agent FTEs working virtually from home both in the U.S. and Canada, including 2,900 from Alpine Access.
     
Sykes Enterprises, Incorporated
Cash Flow from Operations
(in thousands)
(Unaudited)
Exhibit 5
     
     
     
  Three Months Ended
  December 31, December 31,
  2012 2011
     
Cash Flow From Operating Activities:    
Net income (loss)  $ 13,290  $ 5,078
Depreciation and amortization 14,171 11,837
Changes in assets and liabilities and other 3,719 5,800
Net cash provided by operating activities  $ 31,180  $ 22,715
     
Capital expenditures  $ 12,292  $ 8,102
Cash interest paid  $ 513  $ 278
Cash taxes paid  $ 3,149  $ 6,398
     
     
     
     
  Year Ended
  December 31, December 31,
  2012 2011
     
Cash Flow From Operating Activities:    
Net income (loss)  $ 28,423  $ 48,341
Depreciation and amortization 50,848 53,467
Changes in assets and liabilities and other 7,243 806
Net cash provided by operating activities  $ 86,514  $ 102,614
     
Capital expenditures  $ 38,647  $ 29,890
Cash interest paid  $ 2,239  $ 1,065
Cash taxes paid  $ 28,822  $ 24,631
     
Sykes Enterprises, Incorporated 
Reconciliation of Non-GAAP Financial Information
(in thousands, except per share data) 
(Unaudited) 
Exhibit 6
     
     
  Three Months Ended
  December 31, December 31,
  2012 2011
     
GAAP income from continuing operations $15,712 $10,805
Adjustments:    
Acquisition-related severance & consulting engagement costs  271  --
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups  5,004  3,129
Merger & integration costs  697  (620)
EMEA restructuring   (757)  6,267
Other  436  331
Non-GAAP income from continuing operations $21,363 $19,912
     
     
  Three Months Ended
  December 31, December 31,
  2012 2011
     
GAAP income from continuing operations, net of taxes, per diluted share $0.31 $0.14
Adjustments:    
Acquisition-related severance & consulting engagement costs 0.00  --
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups 0.08 0.05
Merger & integration costs 0.01 (0.01)
EMEA restructuring  (0.02) 0.09
Other 0.01  --
Non-GAAP income from continuing operations, net of taxes, per diluted share $0.39 $0.27
             
Sykes Enterprises, Incorporated 
Reconciliation of Non-GAAP Financial Information By Segment
(in thousands) 
(Unaudited) 
Exhibit 7
             
             
             
  Americas EMEA  Other (1)
  Three Months Ended Three Months Ended Three Months Ended
  December 31, December 31, December 31, December 31, December 31, December 31,
  2012 2011 2012 2011 2012 2011
             
GAAP income from continuing operations  $ 24,192  $ 26,374 $3,627 ($4,917) ($12,107) ($10,652)
Adjustments:            
Acquisition-related severance & consulting engagement costs  271  --  --  --  --  --
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups 5,004 3,129  --  --  --  --
Merger & integration costs  -- (46)  -- (574)  697  --
EMEA restructuring   --  --  (757)  6,267  --  --
Other  436  --  --  113  --  218
Non-GAAP income from continuing operations $29,903 $29,457 $2,870 $889 ($11,410) ($10,434)
             
  Americas EMEA  Other (1)
  Three Months Ended Three Months Ended Three Months Ended
  December 31, September 30, December 31, September 30, December 31, September 30,
  2012 2012 2012 2012 2012 2012
             
GAAP income from continuing operations $24,192  $ 21,654 $3,627 $2,359 ($12,107) ($15,341)
Adjustments:            
Acquisition-related severance & consulting engagement costs  271  320  --  --  --  377
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups  5,004 3,766  --  --  --  --
Merger & integration costs  --  --  --  --  697  3,045
EMEA restructuring   --  --  (757)  104  --  --
Other  436  418  --  --  --  --
Non-GAAP income from continuing operations $29,903 $26,158 $2,870 $2,463 ($11,410) ($11,919)
             
(1) Other includes corporate and other costs. 
     
Sykes Enterprises, Incorporated 
Reconciliation of Non-GAAP Financial Information
(in thousands, except per share data) 
(Unaudited) 
Exhibit 8
     
  Year Ended
  December 31, December 31,
  2012 2011
GAAP income from continuing operations $47,779 $65,535
Adjustments:    
Acquisition-related severance & consulting engagement costs  968  126
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups  14,823  12,168
Merger & integration costs  3,848  774
EMEA restructuring   522  6,267
Other  1,404  (1,700)
Non-GAAP income from continuing operations $69,344 $83,170
     
     
  Year Ended
  December 31, December 31,
  2012 2011
GAAP income from continuing operations, net of taxes, per diluted share $0.93 $1.15
Adjustments:    
Acquisition-related severance & consulting engagement costs 0.01  --
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups 0.24 0.18
Merger & integration costs 0.07  0.01
EMEA restructuring  0.00 0.09
Other 0.02  (0.03)
Non-GAAP income from continuing operations, net of taxes, per diluted share $1.27 $1.40
             
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information By Segment
(in thousands)
(Unaudited)
Exhibit 9
             
             
             
  Americas EMEA Other (1)
  Year Ended Year Ended Year Ended
  December 31, December 31, December 31, December 31, December 31, December 31,
  2012 2011 2012 2011 2012 2011
GAAP income from continuing operations  $ 93,580  $ 115,727 $5,488 ($3,746) ($51,289) ($46,446)
Adjustments:            
Acquisition-related severance & consulting engagement costs  591  --  --  --  377  126
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups 14,823 12,168  --  --  --  --
Merger & integration costs  106 967  -- (206)  3,742 13
EMEA restructuring  --  --  422  6,267  100  --
Other  1,404  (4,209)  --  113  --  2,396
Non-GAAP income from continuing operations $110,504 $124,653 $5,910 $2,428 ($47,070) ($43,911)
             
(1) Other includes corporate and other costs.
   
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(Unaudited)
Exhibit 10
   
  Business Outlook
  First Quarter
  2013
   
GAAP income from continuing operations, net of taxes, per diluted share $0.10 - $0.12
Adjustments:  
Acquisition-related severance & consulting engagement costs  
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups 0.08
Merger & integration costs  
EMEA restructuring  
Other  
Non-GAAP income from continuing operations, net of taxes, per diluted share $0.18 - $0.20
   
  Business Outlook
  Full Year
  2013
   
GAAP income from continuing operations, net of taxes, per diluted share $0.87 - $0.97
Adjustments:  
Acquisition-related severance & consulting engagement costs  
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups 0.27
Merger & integration costs 0.01
EMEA restructuring  
Other  
Non-GAAP income from continuing operations, net of taxes, per diluted share $1.15 - $1.25
   
CONTACT: For additional information contact:
         Subhaash Kumar
         Sykes Enterprises, Incorporated
         (813) 233-7143

Stock quotes in this article: SYKE 

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